FACTBOX: Why oil prices hit a record high above $145

(Reuters) - U.S. crude oil on Thursday hit an all-time high above $145 a barrel.

Prices have rallied from a dip below $50 at the start of 2007 and this year have risen by around 50 percent from $95.98 a barrel at the end of last year.

Adjusted for inflation, oil is well above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.

The balance of demand and supply is tight with daily demand of roughly 86 million barrels per day, almost the same level as daily supply.

The following are other major factors that have driven the oil market higher.

DOLLAR WEAKNESS AND FUNDS

A combination of weaker performance in other asset classes and expectations of continued strength across the commodities complex has drawn in investors and speculative funds, providing further support for the market.

An added incentive for them has been the weakness of the dollar against other major currencies, which makes dollar-denominated commodities relatively cheap.

They are also seeking an inflation hedge, as commodities tend to rise when other asset classes fall.